Another Look at Magic Leap and Its Potential Market Impact

Unconfirmed rumors and details continue to slowly surface from the highly secretive Magic Leap. After an unflattering picture of a prototype device was released in February (2017), showing a large backpack tethered to glasses, Magic Leap’s CEO Rony Abovitz came out saying that it was not representative of the current state of the device. Now, new details suggest that the company is closing in on a product release, targeting the end of 2017. The company opened a new office in Seattle in late 2016, and raised US$1.4 billion in funding, with a recent valuation of US$4.5 billion. With this financial status, and no officially released product information, the confusion and worry surrounding the company comes into focus.

In its official statements, the company promises a high-end, mixed reality (MR) device. With that comes heavy processing requirements and an equally heavy price. If the rumors come to fruition, the device will be smaller than the Microsoft HoloLens with a wider field of view (ideally greater than 40°), while hitting a price point around US$1,000. This would create a compelling HoloLens alternative (assuming adequate content/developer support), but consumers are still not likely to buy in due to price, design, and use case applicability. While not officially confirmed, the product will likely have some form of tether to a headset-external pack for battery and processing, and while the headset itself may be smaller than the HoloLens, that pack will turn away most consumers, even assuming that the headset form factor is appealing enough. Initial marketing material hinted at a consumer-focused market approach, with home office and gaming showcased. But similar to Microsoft’s initial push with HoloLens, Magic Leap is better suited for enterprise customers; maintaining an entertainment focus, as the company has done thus far, will mean a B2B2C approach, at least around launch.

Enterprise customers are far less particular about external battery/processing packs and lackluster design; if it works, and provides a return on investment (ROI), then there is interest. Worker comfort is a form factor concern, but interest in HoloLens has proven that non-ideal form factors can be tolerated with a compelling enough experience; battery packs can even be seen as a positive for enterprise users, with the potential for quick swapping and recharging. Enterprise success for Magic Leap will likely come down to platform support and integration capability with existing infrastructure, just like other enterprise augmented reality (AR) implementations.

Magic Leap’s slated market timing will be good for the enterprise market; MR is being positioned as a next step, with novel use cases differentiating from existing applications found in simpler AR glasses like Vuzix’s M300 or Epson’s Moverio BT-300. Use cases that require heavy visualization and spatial awareness will necessitate MR devices like the HoloLens or Magic Leap’s entry.

Looking at the current landscape, a US$1,000 MR device would be the least expensive offering (with MR devices in HoloLens at US$3,000 and devices from DAQRI greater than that, along with AR devices like Vuzix’s lineup lower than US$1,000). Competition will benefit all involved, but especially the most affordable of the bunch.

Even so, the company will not be able to maintain the mystery much longer while also ensuring potential credibility going forward. Distrust in the legitimacy of promotional materials, legal issues, and ever-pressing investor expectation fulfillment will apply a great deal of pressure to publicly release some concrete information.

While the Magic Leap hardware is most talked about, the software and platform component is perhaps even more important and interesting. The company launched a development platform to aid in this, and some high-profile content (a short Star Wars experience) has already been shown. However, how this transitions to the enterprise space, or even to wider-scale consumer use cases and interests, has yet to be proven.

“Yet to be proven” can be used to describe much of the Magic Leap story thus far. Despite massive early investment from top-tier investors, the company has yet to prove itself. Moreover, despite compelling UI/UX videos, the actual device experience is yet to be proven. If a 2017 release date is truly planned for the company’s first launch, then time is running out to provide a level of trust and proof for these topics. A lack of equal competition will help expand Magic Leap’s window of opportunity, but growing developer support for HoloLens may drive customers to Microsoft first, with a more proven (albeit more expensive) platform and product. Realistic (i.e., low) consumer expectations and an understanding of the opportunity in enterprise should help Magic Leap find a favorable position in the AR/MR market; however, that is yet to be proven.